As reported by REUTERS earlier this month, a $ 25 billion legal settlement between five banks had been reached stemming from improper foreclosures, mortgage modification misconduct and other abuses against US homeowners by mortgage servicers. While the $ 25 billion dollar settlement is an important step towards addressing the current residential real estate market and ongoing mortgage crisis as this settlement effectively punishes the banks for alleged abuses in the foreclosure process. Most experts however, are of the opinion that more is required and is not nearly what is needed or deserved to homeowners at this time. We believe any euphoria over the deal will quickly fade as investors realize the flood of additional mortgage-related litigation that the major banks face, said Guggenheim Partners analyst Jaret Seiberg.

It should be noted that the banks involved have up to three years to meet the provisions of this settlement although there are incentives for banks to assist homeowners in the first 12 months. In addition there is an unknown as many of the five major banks involved have Securitized their mortgages (i.e sold the cash flow from their mortgages) in the loans intended from this deal to have principal balances reduced. The principal reduction helps stabilize the market a little bit, but not significantly, said Brian Gardner, an analyst at Keefe, Bruyette & Woods Inc. The monthly savings for those involved will be modest. Furthermore, it appears that any type of principal write down would have to include some cooperation with the investors that actually own the mortgage.

This settlement does not provide a blanket of immunity to the banks and lenders. This settlement is another step towards vindication for homeowners. All of the Attorney Generals involved for fighting on behalf of the homeowners in an effort to preserve the rights of struggling homeowners while continuing to pursue the lenders for their internal misdeeds should be applauded. Although the fight is ongoing, there is confidence that with the proper legal minds addressing homeowners concerns and holding all mortgage servicers accountable on a daily basis, even more successful results will occur on behalf of struggling homeowners.

The Law Office of Lance Denha PA., is committed to insure that every possible avenue is pursed in seeing that the homeowners legal rights are preserved. For further information or assistance, please call at 954-840-0770.